New 41-MW-Capacity Oregon Wind Farm

New 41-MW-Capacity Oregon Wind FarmRepresents a First for PacifiCorp, Energy Trust

A new wind farm with several distinctions is rising in northeastern Oregon.

The 41-megawatt-capacity Combine Hills Turbine Ranch 1 will deliver the first Oregon wind-generated electrons directly to PacifiCorp customers, under a 20-year power purchase agreement.

It also marks the first big renewable energy project funded by the Energy Trust of Oregon , which will pay $3.8 million to cover the above-market costs of Combine Hills electricity. The public-purposes funding agency, which issued a request for wind proposals about a year ago, will own the project’s green tags and pass them to PacifiCorp for its Oregon customers.

Combine Hills marks a "unique partnership of public and private interests," ETO renewable energy director Peter West said in a news release.

Scheduled for completion by year’s end--just in time to secure the 1.8 cents per kilowatt-hour federal wind energy production tax credit--Combine Hills will join neighboring Stateline Wind Energy Center and Vansycle Ridge Wind Farm in what is becoming a "wind and wheat belt" of northeastern Oregon and southeastern Washington.

Developer Eurus Combine Hills received Umatilla County land-use approval in November 2002 for 104 MW of wind capacity, but there are no definitive plans for the remaining 63 MW, according to a company official.

"Organizations like us typically stay on the sidelines for the PPA [power purchase agreement] part," the Trust’s West told Con.WEB. "Either they go out and they subsidize the project before the utilities have chosen it, or after, and that creates its own set of issues. It occurred to us: Why not go in arm and arm with the utilities? So we did, and I think that’s one of the unique things" with this wind farm.

Tom Farnham, project administration manager for Eurus Energy America, said the Trust created this opportunity for Combine Hills. "It wouldn’t happen without them," he said.

ETO issued a request for wind proposals in July 2002, seeking energy and environmental attributes from new or expanded Oregon projects, in the range of 25 MW to 100 MW capacity, selling power to PacifiCorp and/or Portland General Electric. The Trust set a commercial operation deadline of Dec. 31, 2003, coincident with the currently scheduled expiration of the federal production tax credit. The ETO allocated up to $8.3 million to pay for above-market costs of this wind-powered electricity, a significant step toward meeting the agency’s near-term goal of 35 average megawatts of renewables generation by late 2004.

This solicitation yielded seven responsive bids totalling 604.5 MW of capacity, at an average 20-year levelized cost in the range of 3 cents/KWh to 4 cents/KWh at the busbar, West reported last fall.

Two finalists--Combine Hills and a proposed addition to Northwestern Wind Power’s 24-MW-capacity Klondike wind project in Sherman County--were announced in October. ETO board members approved the major contract terms with Combine Hills in December.

The proposed Klondike addition encountered some financing difficulties, West said. With the Eurus project, "We could get more bang for the buck, more megawatts, the least amount of subsidy. In the end we ran out of time with Northwestern ... We had to make a call. We wanted to beat the production tax credit [deadline]."

Among the issues in concluding the 20-year power purchase agreement were transmission and credit arrangements, he said. "This is also a unique project in that effectively the power is ... a network resource," linked to nearby PacifiCorp transmission lines to serve the investor-owned utility’s customers in its Pacific Power and Utah Power territories.

The Combine Hills deal also took shape in the midst of challenging financial conditions for the energy industry, West noted.

PacifiCorp already obtains electricity from more than 70 MW of wind capacity in Wyoming. "This is the first large-scale long-term wind from an Oregon source," said utility spokesman Deston Nokes. "It really came about because of the Energy Trust."

ETO’s $3.8 million contribution--a lump sum payable to Eurus upon the project’s completion and commissioning--represents the difference between Combine Hills costs and PacifiCorp’s avoided cost for resources with similar characteristics, West said. That final amount was reduced from an originally planned $4.1 million.

The Trust allocated $8.3 million for wind ventures for PacifiCorp and PGE, whose customers shell out public-purposes funding admininstered by ETO. Since Combine Hills ultimately didn’t work for PGE, West said the Trust will earmark half that total wind allocation for renewables under PGE’s recent request for power supply proposals . "It’s more than unfortunate that we couldn’t figure out, through this one, to also have a project for PGE. Really what happened in the end was time, time to work out the issues on this deadline, trying to beat the PTC ['s expiration]."

ETO will own the green tags from Combine Hills, but will give these environmental attributes to PacifiCorp as they are created by wind-generated electrons, according to West.

Combine Hills "is showing that the intent of [Senate Bill] 1149 [Oregon’s electric industry restructuring and public-purposes funding law] in this respect is working out," said Nokes. "Part of the intent was to bring more renewables development to Oregon, and this is showing this is happening."

He said this wind power purchase is separate from PacifiCorp’s intent to add 1,400 MW of new wind capacity to its system over the next decade, as envisioned under its latest integrated resource plan.

Combine Hills Turbine Ranch 1
The 41-MW-capacity project will occupy ridge lines and hilltops on the north end of and below Vansycle Ridge, according to the Umatilla County Planning Commission’s findings and conclusions for a conditional-use permit. It will lie about six miles west of Milton-Freewater and about three miles east of FPL Energy’s 299.6-MW Stateline and 24.9-MW Vansycle Ridge wind farms.

Combine Hills earned unanimous planning commission conditional-use approval in mid-November. It generated very little controversy and gained broad support from neighboring farmers and landowners, according to county Resource Services and Development director Dennis Olson.

The 13,375-acre privately owned site leased to Eurus is predominantly used for dryland wheat farming and livestock grazing, surrounded by "sparsely settled agricultural lands," according to the commission document. About 18 acres will be permanently disturbed for this wind farm, which is permitted for up to 104 MW capacity--1 MW short of the threshold for jurisdiction by the state’s Energy Faciliting Siting Council, Olson noted.

The project is anticipated to have little or no discernible impact with scenic values, noise, wetlands, wildlife habitat and cultural resources, according to the planning commission. Bird and bat monitoring studies will be conducted. Olson said a couple of citizens expressed concern about the spread of weed controlling spray; this was addressed in the conditional-use approval.

Eurus plans to erect 1-MW Mitsubishi turbines. Other infrastructure includes underground electrical cables connecting individual turbines, some overhead collector lines and a new substation. The developer estimated a need for 60 to 100 construction workers.

As of July 11, "Everything is basically going right along" with the Combine Hills construction process, Farnham told Con.WEB. "It’ll be done by the end of the year." Eurus also is working on arrangements for the other 63 MW of permitted capacity, he said.